New York City, San Francisco Bay Area are the big losers. The great 2020 exodus raises the question: Will the techies ever return?
I quizzed four Bay Area apartment moguls. One, the owner of thousands of Silicon Valley units, said his occupancy stands at 90% and his rental rates are off 10% from their pre-virus high. Another, the owner of a small but stylish portfolio, said he’d never seen so many intractable vacancies in Palo Alto, and that his rents are down 21% from a year ago. The president of a multibillion-dollar apartment company said his suburban walk-up units were performing close to normal — no more than 7% off —but that his high-rises were down by as much as 25%. (The elevator remains the virus’s biggest loser.)
Why are the Class A urban jewels hardest hit?
“Because they were occupied by renters by choice. Now, there’s no reason to spend $5,000 a month for a one bedroom,” he responded. “There’s nowhere to go, the city is shut down, and no one has to be anywhere in particular. It’s different for the renters of the B and C properties — they’re stuck.”
Along with New York City, the Bay Area is the big loser in the flight of the techies. Seattle less so, and Denver seems unchanged this year.
And the winners? Pretty much anywhere else in suburban or even rural USA.
This great 2020 exodus raises the question: Will the techies ever return? Only if the jobs do. Few millennials and Gen Zers will pay $5,000 for Bay views and lingering fog. This means that companies — and their employees — must conclude that working-at-home is akin to having a substitute teacher in high school: It’s fun for a while, but the talented soon weary of learning nothing. It seems to me that those who wish to get ahead — you can’t get promoted from your bedroom — make sales or meet like-minded employees for friendship or just to get the hell out of their sweatpants will demand a real office the day after we have a month of zero infections.
San Francisco is also another story. Between the homeless encampments, the constant clamoring for taxing the rich and the pervasive sense that life’s quality has somehow been lost in the progressives’ politics, it may be that the city’s undeniable attractions will appeal only to the downtrodden and the tourists, and that its epoch as a major business center ended in 2020. Read more via WolfStreet